Things to Consider Before Buying Property or Land in Bali

Have you noticed a lot of new properties springing up in Bali over the last few years? Perhaps it has made you wonder how easy it is to build your own property or buy your own little slice of paradise. Building or buying here is an exciting journey that can give you a great ROI, but it also requires preparedness, knowledge and the ability to adapt to changes. Before you get started, here are some things you should consider before you purchase property in Bali.

Understand Your Ownership Rights

A good place to start is understanding your rights in terms of ownership. Freehold (Hak Milik) offers full ownership rights but is only available to Indonesian citizens. You should be wary of buying land in someone else’s name in order to purchase it as freehold, as doing so has often resulted in legal disputes or the investor losing their money completely. If the land is directly connected to your business activities, you may be able to buy it with more rights, but it’s best to seek professional advice from credible consultants for clarification. 

As such, leasehold (Hak Sewa) is the standard, allowing for long-term use of land through a rental agreement between the lessee and lessor. Usually, leasehold agreements are a maximum of 25-30 years, often with an option to extend for another 25, making them the ideal option if you’re looking for a longer term investment. Upon securing a plot of land, you’ll need to secure approval from the Ministry of Agrarian and Spatial planning. 

Other options are available, such as Hak Pakai (Right to Use) and Hak Guna Bangunan (Right to Build). These specific land titles permit the holder the rights to use or build on land owned by another party, within a set validity period and sometimes with the option to extend. Making the right choice between these arrangements depends on your needs, what you plan to use the property for and the length of time you wish to use it for.

Do Your Due Diligence Before Buying Land or Property

When buying a property or land, due diligence is a must. Before handing over any money, asking the landlord or agent to show you the property certificate and legal documents, as well as verifying ownership history and that the land is free from disputes will ensure you don’t have to deal with headaches later on. This is especially important if the person listed on the certificate has already passed away, as this can sometimes lead to issues. 

If you wish to find a premises for a business selling alcohol, checking your proximity to mosques, churches, temples and other religious buildings, schools and other sensitive areas is key. Additionally, compare the property or land you are looking at with others in the area to get an idea of if what the asking price is is really a good deal. Working with a reputable and communicative agent should help make checking this information much easier, but you should make sure that you are also doing your own research throughout the process.

Land certificate in Indonesia is in green color.

Check Zoning Requirements

In Bali, land is divided into six different zones: Green Zone (strictly for agricultural purposes), Yellow Zone (suitable for residential buildings, including villas), Red Zone (designated for commercial activities), Pink Zone (ideal for villas and vacation rentals), Orange Zone (allows both residential and commercial activities), and Conservation Zone (protected areas where commercial and residential activities are prohibited). Before making an investment decision, it's essential to ensure that the land aligns with your intended purpose, whether through leasehold, Hak Guna Bangunan, Hak Pakai title, or by directly purchasing a finished villa. You can check the Bali zoning map at the National Land Agency and seek legal assistance to ensure compliance with local zoning laws.

Final Thoughts

Investing in Bali requires careful planning, research and of course, extensive consideration.  Allocating a small part of your budget to seek professional advice is highly recommended, as it will help you to ensure a smooth purchase and avoid time-consuming complications or financial losses. Especially if this is your first foray into real estate. Understanding the market and your options before making significant commitments is key to securing your dream property in Bali without overpaying. If you need any more information or property consulting services from our team of experts, check out our property consulting services or visit our office in Pererenan. We would be more than happy to help you make the process simpler with our knowledge of the local property landscape.

Written by Team Bali Solve